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Most people will tell you they're long-term investors. They think they are able to ignore the distractions that make others panic and sell. They think they buck the trends, and have the equanimity to buy when others are selling and sell when others are buying.

But there's ample evidence that many of those investors are deluding themselves. In reality, most investors act like very bad traders. They regularly react to short-term events, making decisions that harm their investment returns. This is a key reason so many investors, individual and institutional, lag behind performance benchmarks like the Standard & Poor's 500 index.

Now, a new type of options contract that expands the roster of short-dated puts and calls may help investors save themselves from the fallout of emotionally driven investment decisions.

These new options—call them shorties—enhance existing options called weeklies, which expire in one week, along with options that expire in standard cycles from one month to three years.

WITH LAST WEEK'S INTRODUCTION of shorties, investors will see a menu of weekly options that expire for each of the following five weeks. This flexibility is a big deal because it allows investors to pair options to specific events—like matching wine to food or fine-tuning the ballistics profile of a rifle cartridge.

Shorties will let investors make pure-play trades—or hedges—around events. Aggressive traders will speculate, but shorties also provide investors with a tool to isolate volatile market events. Hopefully, this will stop some investors from making emotional, event-driven decisions. Instead, investors can trade or hedge an event using shorties, rather than absorbing risks into their total portfolio.

Shorties also have better pricing than options that expire in a month or more. Why? The more time before expiration, the more investors pay for "time premium." This makes shorties resemble inexpensive, high-class lottery tickets that pay off big or lose little.

"In the wake of the financial crisis, investors want and need the flexibility to tailor solutions and outcomes to their portfolios," says Jim Hyde, a New York Stock Exchange senior vice president. "Allowing investors to match the duration of expiration to events is a significant development in the U.S. financial market."